Morgan Stanley IM: Hands-On Operational Improvement Key to Creating Alpha in the Middle Market

It is increasingly important as we adjust to an environment of higher interest rates and inflation, lower levels of financial leverage, and uncertain macroeconomic growth.

Key Features

• ‘Buy and Hold’ is no longer a viable strategy in the current macro environment.
• Hands-on portfolio operations is critical to driving profitability and equity value creation.
• Alignment and integration of investment and operating teams is key throughout the investment lifecycle.
• A deep and broad team of operating resources is essential to driving real change in the portfolio.

Differentiation is critical in a dynamic private equity landscape
The middle-market private equity landscape has evolved significantly in the past decade. Investable dry powder has set new records each year from 2010 to 2023 and the sponsor universe has seen a significant volume of new entrants. An increasing number of investors, a larger pool of capital that needs to be deployed, and a fixed supply of top-quality companies have combined to drive up asset values, and in turn placed an ever-greater importance on the ability to drive true alpha.

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